At a time of global carbon neutralization efforts, BlackRock launched the world's largest carbon neutralization ETF-- US carbon conversion reserve fund (US Carbon Transition Readiness fund), on Thursday, raising $1.25 billion from institutional investors, setting a new record.
The previous record was also set by BlackRock, which launched a $850 million iShares ESG MSCI USA Leaders fund in May 2019, which is 50 per cent higher than the previous record.
In addition, another sister, carbon Neutral ETF, which invests in non-American companies, also went public on Thursday with a value of $475 million.
It is worth noting that the investors behind these two ETF are well-known, including California teachers' retirement fund (Calstrs), Temasek, Sura Asset Management, Varma Mutual Pension Insurance Insurance Firm, Profuturo Group, FM International and renaissance sancere. Among them, Calstrs is the main financier, contributing US $650 million for ETF investing in US enterprises and US $350 million for non-US ETF.
As to why heavy investment, Christopher Elman (Christopher Ailman), chief investment officer of Calstrs, explained that the transition to a low-carbon world will take time, but our portfolio needs to mitigate the risk of climate change. In the long run, companies that actively transition to a low-carbon economy will outperform the market, and investors will also benefit.
Globally, investor demand for ESG products is surging as governments aim to achieve carbon neutrality by 2050, tilting capital towards companies with a good environmental, social and governance record. Total ESG industry assets rose 50 per cent last year to a record $1.7 trillion, according to Morningstar.
